Show old prices when discounting

You know how clothing stores often put a lower price tag on an item but leave the original price… even when the item has been discounted multiple times?

That’s because retailers know you’ll use the past price as a reference point.

It’s the same online. Whenever you offer a discount, show the past price as well so there’s an anchor. It’s even more effective if the past price is more visible or appears first.

A legendary example of this came from—but who else—Steve Jobs.

While revealing the iPad in 2007, he flashed a big screen with a $999 price tag behind him—the price predicted by experts.

But as he went on talking about the superior features of the gadget, he revealed a new price: $499. Compared to the “realistic” price, this seemed like a no-brainer.

And given that iPad sold 40M copies in its first year, we can safely say that it worked.

Start with the bad news first

A study from 2011 found that people are more susceptible to anchoring when they’re in a bad mood.

Sure, you don’t want to conjure a dark cloud above your shoppers. But starting your offer or your campaign with something bad can be a strong anchor when it leads into better things.

Insurance companies, health-related products and services, and charities or non-profits often use this strategy to drop the mood before pointing you to a positive solution.

Here’s how Thrive Market—a grocery marketplace tackling the problem of inflated, unhealthy food—uses the issue as an anchor:

Even if your cause isn’t this noble, it’s still good to start with the problem first, then provide a solution. It’s copywriting 101.

Use lower-priced item as an anchoring point

You’ve probably heard that lowering your price point to $x.99 is better than rounding up the price. That’s true—because shoppers will often anchor to the first digit.

But there’s also a bottleneck here. Research has shown that if you commit to this pricing type, you might prevent shoppers from upgrading to a more expensive product.

The reason? The anchoring effect, again Upgrading from a $3.99 product to a $6 product sounds more expensive than upgrading to a $4 product. So it works both ways.

What you can do: If you’re putting products side-by-side and want to sell the more expensive option, price the cheaper product—or the anchor—“closer” to your desired price.

In the same study, two sizes of coffee were placed in front of shoppers—a small batch priced at $0.95, and a large batch priced at $1.20. Only 29% of customers choose the larger cup.

However, when they increased the price of a small cup to $1 and a large to $1.25, 56% opted for the larger coffee.

Given what we’ve learned about anchoring, it makes perfect sense, doesn’t it?